Euro up vs. dollar as borrowing rates fall in Italy, Spain and US data looks weaker

The euro rose against the dollar as borrowing rates fell in Italy and Spain and on worries from investors that the economic recovery in the United States is slowing. Worries that the US economy is slowing comes from news of high unemployment claims and disappointing retail sales.

By Associated Press
Updated: Thursday, January 12, 12:10 PM
Washington Post

NEW YORK — The euro rose against the dollar Thursday as borrowing rates fell for Italy and Spain, a sign that investor confidence in those two debt-hobbled countries is improving.

Traders also bought euros because of worries that the economic recovery in the United States is slowing. More Americans filed unemployment claims last week, and retail sales barely grew in the last month of the year.

The euro rose to $1.2831 in afternoon trading Thursday from $1.2697 late Wednesday. The euro hit a 16-month low of $1.2661 on Wednesday after Germany predicted that its economy shrank in the last three months of last year.

Italy sold one-year bonds at a rate of 2.735 percent, less than half what it had to pay last month. And Spain raised double the amount of money it had hoped to at its bond auction.

Investors have worried about the debt of Italy and Spain, the No. 3 and No. 4 economies among nations that use the euro. Greece, Ireland and Portugal had to be bailed out after their borrowing rates became unsustainable.

The dollar fell against most other currencies.

The British pound rose to $1.5335 from $1.532. The dollar fell to 76.73 Japanese yen from 76.87, to 0.9428 Swiss franc from 0.9551 and to 1.0189 Canadian dollars from 1.0196.

The dollar also fell against the Australian dollar, the Norwegian krone, the Hong Kong dollar and the Brazilian real.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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